Usage Of Personal Financial Software

Personal debt has become a national epidemic and has many consumers are looking for a system to assist them with paying off their mortgage and other debt faster than through traditional amortization schedules.America has always been a nation of consumers and the American people have always enjoyed one of the highest standards of living in the world. Something else has contributed to this national crisis.
What has changed in the last several decades is that we have developed very sophisticated technology to acquire debt. Debt acquisition is as close as your cell phone or personal computer and can be accomplished in a matter of seconds.However, we have been slow in developing such sophisticated systems to manage that debt at the consumer level. We have been the victims of a technological gap between debt acquisition and debt reduction.If you do not manage your debt, it will manage you. Or more precisely, your creditors will manage your debt for you and they will, of course, manage it in a way that is most favorable to them, not necessarily you.At the consumer level, we tend to keep our debts separated, divided, and isolated in separate accounts, making it impractical, until recently, to strategically manage that debt.Modern technology has been employed by a variety of financial service companies for managing internal debt but have only recently become affordable for the average consumer.Debt elimination programs have been popular in other countries. In this country, however, it is a relatively new opportunity to systematically manage our personal and consumer debt. We now have access to affordable technology to manage our debt rather than allowing it to manage us.A technology based system does not consist of these types of programs.It is not a set of instructions or a "How To..." manual from any number of experts which only tell us what we already know; instructing us to "stop spending so much money", or "cut up our credit cards". It is not a "makeover" system which painfully rearranges our daily spending patterns.It is not a general ledger or budget for eliminating debt which doesn't reflect our preferred spending patterns.It does not involve the refinancing of existing debt or consolidating smaller short term debts into larger long term debts. It is not a non-conventional or re-calculated payment schedule. It does not involve negotiating with your creditors or any means of debt reduction which avoids the repayment of legitimate debt on a dollar-for-dollar basis.Just like the bank model, modern debt management systems are integrated with your daily and monthly financial transactions. They are dynamic. Modern debt management systems have the ability to analyze and manage all of your debt, including your mortgage debt, side by side in a single environment and make strategic adjustments based on your daily or monthly cash flow.A modern debt management system is programmed for liquidity. Liquidity is to debt what water is to fire. If you have an abundance of liquidity, you could be out of debt in very short order. On the other hand, if you have a shortage of liquidity, it could take decades to get out of debt.A modern debt management system focuses on ways to harness current liquidity and seeks to fully develop your potential future liquidity. It harnesses your ability to cancel interest and apply more liquidity to principle balances. It can develop multiple sources of liquidity and utilize that liquidity as leverage against debt.Because of the importance of liquidity, modern and effective debt management and debt reduction systems are fully integrated with your current monthly income and expense cash flows. That is not to say that increasing your income and/or reducing your expenses is a requisite. A good debt management system takes advantage of existing cash flow, not necessarily changing it.A modern debt management system is relatively painless to follow and does not require significant changes to your established spending patterns. It can be set to aggressively pay down debt, to maintain a certain level of debt but reduce the carrying cost, or fund a retirement or college savings plan.Today's sophisticated, versatile, and effective debt management systems are not inexpensive. However, in terms of future interest savings, they can make up the cost of the system in the first few months of use and, over time, produce interest savings in excess of the total amount of current and future debt.An inexpensive or do-it-yourself system is probably not a good alternative. While some level of success could be expected, one would not be capable of producing the same results as a more comprehensive and sophisticated system.Any current financial plan worth its' weight in paper should address both sides of the balance sheet and include a modern debt management system.

Financial Steps In Usage Of Financial Software

If you take your business seriously, you'll already be using balance sheets, income statements and cash flow statements quarterly or annually to get that big picture view of how your business is going. But there are a few financial performance measures that are worth giving more regular attention to - at least monthly, and possibly even more frequently. And thankfully, you can get just about all of them reported quite easily from off-the-shelf financial software.

Cash Flow is essentially the net flow of cash through your business in a particular period, like a week or a month or a quarter. It's simply the difference between all the cash you've received and all the cash you've paid out during that period. It's important because cash is the lifeblood of keeping your business operating.

Operating ProfitGross Profit is the total sales your business made in a particular period, less the total costs associated with producing those sales (not the same as total costs paid out in the period). Operating profit is Gross Profit less operating or fixed costs. Remember, there are a few types of profit measures! Operating profit matters because it's a measure of which direction the wealth of your business is going. If Operating Profit indicates a loss, then you've reduced the wealth of your business. If it's positive though, you've added to the wealth of your business.

Wealth is current net financial position your business is in. It's the difference between the value of all that the business owns, and all that the business owes.

Return on Equity is the ratio of profit to shareholder invested funds in your business. This is a great piece of information for any business owner or manager: how well is your business multiplying value for you? If you're a solo operator or consultant, and you didn't really have to invest anything in your business, then another good measure akin to this one is Return on Time Invested (ROTI) - what value does your business return for each hour you put into it?

MarginProfit Margin is the ratio of gross profit to total revenue and it's really telling you how well your business turns sales into profit. Knowing this about your business as a whole is good, but also knowing this about your various products or services is revelational too!Sure, there are many more financial measures you could use, and probably should use. But if, like many business owners, you've been neglecting the financial performance of your business, these 5 are a good start.

Financial Problems And it"s Solvation

Do you have problems with your personal finances? Or perhaps your business is on the brink of a financial crisis? After decades as a CPA, Chief Financial Officer, and financial counselor, my cumulative and concentrated wisdom in solving financial woes is this: create no new problems. I have seen this simple principle guide people and companies out of terrible financial difficulties. And I have used it myself to help our management team survive financial crisis long enough to turn the company around.Financial problems are usually made up of many smaller problems that eventually add up to one big problem. They accumulate over time. Quite simply, they are based in the decision-making process of where you spend your income. Though most of us have complete control over these decisions, it seems that the critical and urgent problems - the proverbial "squeaky wheel" - get addressed first. This is definitely the WRONG APPROACH!

You may solve one individual problem, but a new one is almost always created to take its place. Over time, your total problem gets out of hand. This wrong approach is like a snowball rolling down a hill. Something needs to be done to level out the slope - but what? The right approach to financial problem solving is to draw a line and say, "After today, no new problems!" It is all a matter of where you focus your attention. The only way to level the slope is to pay attention to the strategies that keep you from creating new problems. In the financial arena, the line you draw is when you develop a "zero based budget" (ZBB). The ZBB comes to a break-even bottom line, which means you are creating no new debt. Since all your debt repayment is a part of your ZBB, your debts get paid over time and you eventually break into the fresh air of financial independence. Over time, you will control your financial destiny.But be aware that you will be forced to make choices, some of them rather difficult. In your business, you may need to cut your overhead or find financing for that new marketing program to increase your income. Personally, you may be forced to cut the money spent on clothing, entertainment, or eating out. You may need a part-time job for a while to increase your income. You did not get into trouble by having good habits, so you won't get out of the crisis without changing something. The only way to solve a financial problem is to grab the reins of the wagon you're on, which is headed over a cliff, and say, "I am going to control where this wagon is going. I am going to gain control over my expenses and make them less than my income." If you are tired of living on the slippery slope of ever-increasing pressures caused by your finances, change where you focus your attention. Base all your financial decisions on a budget that you have created - and stick to it! It may take some time, but the day will eventually come when your finances are problem-free